With a $1bn Market Value, the Global eSports Market Isn’t Playing Around

By November 15, 2018 April 3rd, 2019 The Weekly
The League of Legends World Championship finals demonstrates how big eSports have become

Most articles about eSports like to point out the fact that video games have broken out of nerds’ basements and are cool now. It’s certainly true, but it’s been true for some years. If you don’t know that video games are a US$138 billion industry, then you just haven’t been paying attention.

It’s okay though, because the hottest vertical in the video games market is still picking up steam. The eSports market had a stellar year in 2018, growing around 35 to 40 percent from 2017 to reach a value of US$880 million according to Insight Provider Pelham Smithers.

Just a couple of weeks ago, the League of Legends World Championship 2018 was held in Incheon, South Korea. It is perhaps the biggest “sport” in eSports by sheer numbers.

Viewership of the finals on 3 November peaked at over 200 million viewers, up from 60 million for the same event the year before. Notably, if you exclude Chinese viewers, the number falls to just under 2 million.

Gimme the Prize

Viewers and revenue aren’t the only figures on the rise in the eSports arena. In his latest Insight on Smartkarma, Smithers points out that prize money has been growing up nicely as well.

Combined winnings across the most popular eSports video games are set to exceed US$140 million in 2018, up from just under US$120 million last year.

Mainstays like US-based Valve’s Dota 2, the aforementioned League of Legends, and Blizzard’s Overwatch and Hearthstone have been some of the strongest performers in this regard. But the past year saw new contenders for players’ time and money.

The “Battle Royale” genre, where individual players or teams of players enter a shooting match with the objective of being the sole survivor, hit it big with PlayerUnknown’s Battlegrounds (or PUBG) and Fortnite. The two of them have generated US$24.6 million in prize money this year to date.

The ecosystem developing around eSports includes manufacturers of specialised eSports hardware, like Razer and Logitech, live streaming video providers that broadcast tournaments, such as Amazon-owned Twitch.tv and AfreecaTV, and organisers like ESL, owned by Swedish media group Modern Times.

Traditional sports leagues like the NBA, Formula 1, and ONE Championship are also getting in on the fun.

Tencent Rules the Roost

The hottest eSports games at the moment have a common denominator: Tencent owns majority stakes in Riot Games and Epic Games, which develop League of Legends and Fortnite, respectively, and has a distribution deal for PUBG in China.

However, after a Chinese government crackdown on new games releases, Tencent is not able to charge for the game, which could net the company up to US$1 billion per year, according to Reuters.

According to its most recent results, Tencent’s mobile games revenue grew 7 percent year-on-year but PC games revenue fell 15 percent year-on-year.

But current Chinese regulations, which aim to address the effects of gaming addiction on children and undesirable content, are expected to squeeze Tencent’s margins.

Do you want to know more about the state of play in the video game and eSports markets? Pelham Smithers will be in Singapore on 23 November for an exclusive event by Smartkarma and SGX, to present his latest report on the gaming industry. Find out more and RSVP for the event here.

More Insights by Smartkarma

Sign up or log in to Smartkarma to read more.

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